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opinion," so and so, you are basing that opinion upon what you remember of what you have been told by somebody else?
Mr. Tulloss. Yes, sir; and I have tried to so state in each case. I am not testifying as to facts that I know, but it is largely hearsay.
Representative BARDEN. Wouldn't you think there would be a little difference between a 5-year-old second-hand machine and a 2year-old second-hand machine?
Mr. Tulloss. Yes, sir.
Representative BARDEN. Wouldn't you think there would be a difference between an obsolete machine and a modern one?
Mr. TULLOSS. I do indeed.
Representative BARDEN. And one that will do the work and one that will not do the work?
Mr. Tulloss. Yes, sir.
Representative BARDEN. Don't you think all of that is material in explaining why he should accept a bid of a thousand dollars more on a piece of equipment of that size?
Mr. Tulloss. I think if these facts had been available to us at the time, that in all probability we would not have made the exception. I have not taken the initiative in bringing forward any of this information. We are not accusing or charging T. V. A. I am merely trying to give such assistance as I can, as requested in specific cases. I did not call attention to this item. I tried to answer some questions with reference to it, and have, upon having the answer called to my attention, why I have read the answer.
Representative BARDEN. Just among us girls, don't you think that many of the exceptions and matters which you have testified about here, if you had the full facts before you, just as you have in that particular item, very likely you would change your opinion?
Mr. Tulloss. I can go so far as to say that the larger part of these exceptions have been recommended for removal on ascertaining the facts. Our difficulty was in obtaining the facts.
However, I will say that we did not prefer charges against T. V. A. for not giving us the facts. We are so used to being denied things that we were going along, laboring in our usual way, and trying to make an audit.
Senator SCHWARTZ. The practice is, isn't it, where the record as you see it first would disclose what might be an apparent violation of law, and you do not have sufficient facts, you make an exception?
Mr. Tulloss. Yes, sir. Senator SCHWARTZ. Then you reserve your judgment on the merits of the situation until the T. V. A. or any other body comes in with the explanation?
Mr. Tulloss. Yes, sir; now, under the law we must make this audit by fiscal years. We must close our reports at June 30 of each year. Whatever might transpire after that could be no concern of ours, if we were current with our audit examinations. Now, when we find later on some item would be removable and our report is delayed, why, we would not put it in the report then, but at this time this was the first report, we had no reply. This reply came in in December 1935 as against our report that was made on April 3, 1935, Senator SCHWARTZ. Considering the volume of business down there and the number of exceptions, they were not unnecessarily negligent in getting in a reply?
Mr. TULLOSS. No, sir.
LACK OF FRAUD OR CORRUPTION
Representative THOMASON. Regardless of any criticisms you have made, and also regardless of any explanations that you have had since that in the main you say have been satisfactorily explained
Mr. TULLOSS. A great many. Representative THOMASON (continuing). And also regardless of any differences between you and the T. V. A. on the construction of a statute or the consent of Congress I would like to ask this question: In view of your long experience now, including the 4 or 5 years with T. V. A., in inspecting their properties, their books and records, have you found any shortage, defalcation or evidence of dishonesty upon the part of any officer or employee of the T. V. A.? The committee wants facts, or I do, and I think they all do.
Mr. TULLOSS. I understand
Representative THOMASON. Carrying with it, of course, criminal intent.
Mr. Tulloss (continuing). Of course, there have been minor shortages, but most of them have been made up. In fact, I presume all of them.
Representative Thomason. Nothing that carries with it, as I say, criminal intent upon the part of any official or any employee?
Mr. TULLOSS. There might be in some instances, small instances.
Representative THOMASON. Some minor, insignificant matter, but I mean anything worth while reporting to this committee, which it is charged to find out, and which we want to know, do you know of any evidence of dishonesty, in the matter of these bids or anything else in connection with the records or ramifications of this great project?
Mr. Tulloss. We certainly have not reached a point here where we are ready to conclude that any item should be specifically reported to Congress as fraudulent.
Representative THOMASON. You are not now willing to say to this committee
Mr. Tulloss. No, sir.
Representative THOMASON. That in your past examinations of the properties and the records and books, and regardless of these differences of opinion in the manner and method of accounting and the construction of the statute and intent of Congress you do not charge any fraud on the part of anybody connected with T. V. A. at this time before this committee?
Mr. TULLOSS. That is correct.
Representative THOMAson. May I ask if both your associates join in that statement?
Mr. MATCHETT. I do.
Representative THOMASON. All three of you say "So far as we know, there has been no dishonesty in the T. V. A. anywhere in any transaction that is worth the while of this committee."
Mr. Tulloss. I believe that the Acting Comptroller General made such a statement to Senator McKellar in reply to bis inquiry regarding the items carried in the annual report.
Representative Thomason. From your knowledge of the audit?
Representative THOMASON. And of the men working on that vast undertaking?
Mr. Tulloss. Yes, sir.
Representative THOMASON. And that is your deliberate judgment now?
Mr. Tulloss. Yes, sir.
Representative Thomason. You tell this committee so far as you know there is no dishonesty anywhere in the T. V. A. set-up?
Mr. Tulloss. Yes, sir.
Representative WOLVERTON. Do you have in mind the special report that was made by the General Accounting Office with respect to the purchase of phosphate lands from the agricultural corporation at a price of $645,000 for land that they purchased for $145,000 a few years before, some 2 or 3 years before, which occasioned a special report to this committee, on the basis of which it was turned over to the Department of Justice for investigation?
Mr. Tulloss. I recall that, yes, sir.
Representative WOLVERTON. We have not had a report on that yet, this committee has not?
Representative BARDEN. Does the gentleman mean to leave the inference in the record at this point that such exists, with criminal intent or fraud? Does not the gentleman think-may I just ask this, in an apologetic tone?
Representative WOLVERTON. You don't have to apologize. You are sovereign on this committee.
Representative BARDEN. I will ask it in my sovereign right then, if you put it that way. Do you think it is quite right to leave a statement, à shotgun clause of that kind, when men's reputations are at stake?
Representative WOLVERTON. I don't know what you mean by "shotgun" statement.
Representative BARDEN. You have seen shotguns, haven't you?
Representative WOLVERTON. Evidently you are more familiar with them than I am.
Representative BARDEN. I have faced them, so that is all right; I know what they look like.
Representative WOLVERTON. I am glad you survived. But the point I have been trying to make was this: the question or the observation based upon a question that was made by the gentleman from Texas, it was very broad. Knowing the facts that were presented by the General Accounting Office in their special report with respect to the purchase of the phosphate lands at the price I have indicated, and that were important enough to impel this committee to turn that report over to the Department of Justice for further investigation and report, I felt that so far as I was concerned I was willing not to express any opinion until that report was made available; and I assumed that the witness had probably overlooked that important document, and the procedure that had been taken by this committee with respect to it.
And let me say further, and I am trying to avoid going into the details of it, I think the committee will remember from a reading of that report that there was a general statement made at the end that there might be one or two or three different contingencies, so that it would seem to me that with that important report which has come to us from your department, that it is pretty uncertain testimony to say that there is nothing when this committee has found something that was of sufficient importance to turn over to the Department of Justice to investigate.
Mr. BIDDLE. May I ask the witness a question?
Mr. Biddle. Mr. Tulloss, who made that report to your department?
Mr. Tulloss. Mr. DeSombourg and an assistant, as I recall.
Mr. BIDDLE. Then I suppose the witness could hardly answer. You have not read it, and you don't know the contents of it, is that the answer?
Mr. Tulloss. Well, the fact of the matter is it seemed so clear in my mind in a general way that I thought I had read it, but you are asking me a question
Mr. BIDDLE. You are not sure?
Representative THOMASON. In view of the insinuation of Mr. Wolverton and his evident feeling on that particular item, I would like to know if you still stand on your answer to my question that so far as your knowledge goes you know of no dishonesty on the part of any T. V. A. official or employee? Do you still stand on your answer?
Mr. Tulloss. I would like to explain why there seems to beI might not have made myself clear as to just what my answer signifies. When we are ready to charge fraud and the like, we must be prepared to prove it. I cannot say merely because of suspicions.
Representative Thomason. Well, you are hedging a little now, aren't you?
Mr. Tulloss. I don't mean to hedge, sir. I mean to say that I could not say that there was evidence of fraud in T. V. A. on the suspicion that is cast upon someone possibly by this report.
Representative THOMASON. Well, certainly-
Representative THOMASON. None of us want to cast undue suspicion or charge anybody falsely, but I am sure this committee wants the facts, and that none of us have anybody to shield or protect.
And so having gone into these accounts as you have, these records and books, I just wanted to know if the committee could still rely upon your statement that so far as your knowledge goes you know of no fraud or have no evidence of dishonesty on the part of T. V. A. officials or their employees? You said “no."
Mr. Tulloss. You say "no evidence of dishonesty." May I ask would you consider a chain of circumstances and facts that raise a doubt in my mind, whether that would be evidence?
Representative Thomason. I will just ask you the direct question as to whether or not you can furnish this committee with any evidence of dishonesty? If there is any we ought to know it, and the public ought to know it.
Mr. Tulloss. I cannot furnish you evidence that will establish dishonesty,
Representative THOMASON. Does that go for your two associates too?
Vice Chairman MEAD. The evidence that you have, if I may interrupt, perhaps arises in great part as a result of the legal differences, that is, the differences interpreted by the legal authorities of your division and of the T. V. A., insofar as their submitting to your accounting is concerned, they hold that they are more or less free and independent of you, and you hold on the other hand the opposite view, and as a result of that clash you have developed a great many differences of opinion, different interpretations?
Mr. Tulloss. That is true. I assume that you are not connecting this with what we were just talking about.
Vice Chairman MEAD. No; but I mean that probably was the cause of it originally. If the intent of the law was so clear that T. V. A. would have to turn over all their transactions to you, then perbaps the reports and records would be clear so far as you are concerned, and clear so far as they are concerned, but because they do not have to, or because they feel they may withhold them, there is this constant difference of opinion cropping up. It could be clarified by Congress clarifying the law. I suppose if that was done, either one way or the other, it would make your job a little more easy or comfortable?
Mr. Tulloss. Yes, sir. We would not ask Congress to decide with us or with T. V. A. We are neutral in this.
Vice Chairman MEAD. You are doing the very best you can under the circumstances.
Mr. Tulloss. Yes, sir. Vice Chairman MEAD. Now, with regard to your answer to Mr. Wolverton, so that I might reinforce your position, the position that you have taken, that you have found no corruption, when the hearings opened and we began at Knoxville, I asked the pointed question of Dr. A. E. Morgan, who presented the charges originally, and he answered as you did, that he knew of no corruption or fraud, criminal dishonesty, and he wanted to make it clear, or he made it clear that he knew of none. Of course there were differences of opinion, just as you have suggested, waste, perhaps, in his estimation, perhaps as a result of policy, but he said there was no corruption or fraud. I am glad you said it.
Representative WOLVERTON. Now, we will get back to the steam shovels again, and so that there won't be any misunderstanding of the